“As far as microfinance lending is concern, local currency is the way to go” this is according to International Finance Corporation’s (IFC) Frank Ajilore in his response to innovative measures of dealing with forex challenge. Speaking during a panel discussion on “Raising Capital To Promote Inclusive Financial Growth In Sierra Leone” Ajilore said he would not recommend lending in dollars except if there is significant assurance that there is going to be a cap “but if that cap is not possible there is no point.” He considers it a risky venture for international institutions to lend money to local Micro Finance Institutions (MFI’s) in foreign currency given the Forex appreciation against local currencies. In 2018 December, “our management approved that we should proceed with issuing a local currency financing certificate for Sierra Leone” he disclosed, adding “We do have the product and it is ready to leave the roll-out chamber, when that is done we will be able to lend in local currency” he said. There are other options that MFIs can use in lending in local currency without necessarily having to deal with dollar to Leones, he noted “but we need to work with the regulator to be able to ensure that that is possible.” He added that, the capital requirement for a microfinance institution to accept deposit is around US$100,000, which “in itself could be an impediment if they are going to be deposit accepting institution.” Ajilore maintained that if they are going to be a bigger bank they need a capital base and that is something, which they need to consider. For an institution like IFC, he said his joy will be that they are lending to the financial sector in Sierra Leone not just at the top of the pyramid but also at the grassroots level, where he feels it is most fulfilling to be. “So, if we are going to lend to the microfinance sector there must be some form of aggregation I don’t know how that will work out, so that it can attract the kind of capital that will make a difference” he said. Speaking on the issue of lending on the margin, he said that if the MFIs do not have the skills they will not be able to achieve their triple objective (socio, community and business), “if you are to be who you should be you really need some kind of aggregation to enable bigger capital to come to the system.” That he said is not necessarily something MFIs have to create, suggesting it could be a Bank of Sierra Leone (BSL) concept or initiative whereby there is a housing of big fund somewhere like $10 million that will be aggregated to one of the big institution to manage. “So that type of liquidity will now help the acceleration of financing within the sector because there is so much the sector can do if we are to move forward.” The MFIs he said should be well framed and active in rural and urban areas.

By Zainab Iyamide Joaque

Monday May 20, 2019.